How to use the ROI Calculator
Enter what you invested and what you got back in total. The calculator shows your net gain and the return as a percentage of what you put in.
Worked example
You spend $2,000 on a campaign and it brings in $2,600. Your net gain is $600, and ROI is 600 ÷ 2,000 × 100 = 30%. If the same project had returned only $1,700, ROI would be −15%, a loss.
Time changes the picture
ROI ignores how long the money was tied up. A 30% return in one year is much better than 30% over three years, which works out to about 9.1% a year. When comparing investments of different lengths, look at the annual rate as well, and include fees and taxes in what you count as the cost.
Annualized ROI
To compare investments held for different lengths of time, convert ROI to a yearly rate: annualized ROI = (1 + ROI)^(1 ÷ years) − 1. A 50% return over four years works out to about 10.7% a year. A 20% return in one year beats it, even though the total looks smaller.
Limitations of ROI
ROI compares the final value with the cost of investment, but it does not show risk, timing or cash flow. A real estate deal with a 40% ROI might need years of repairs and tie up money you cannot touch, while a smaller return from a savings account is available any time. For business investments and capital gains, include all costs, such as fees, taxes and interest, in the initial cost so the return on investment (ROI) is not overstated.
The formula
ROI = (final value − initial investment) ÷ initial investment × 100
Examples
- Invested 1,000, now worth 1,250
Net gain: 250 ROI: 25%
- Invested 5,000, now worth 4,500 (a loss)
Net gain: -500 ROI: -10%
- Invested 20,000, now worth 32,000
Net gain: 12,000 ROI: 60%
Limitations and assumptions
Does not account for timing, taxes, fees, inflation or risk. Not investment advice.
Frequently asked questions
What is the ROI formula?
(Final value − initial investment) ÷ initial investment × 100.
Does ROI consider time?
No. A 25% return over one year is far better than over ten, so compare time periods too.
Can ROI be negative?
Yes, a negative result means a loss.
Does it include fees and tax?
Only if you include them in the numbers you enter.